Auto industry body Society of Indian Automobile Manufacturers on Saturday welcomed the GST Council's clarification on the definition of SUVs, saying it is on the lines of its discussions with the finance ministry.

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Briefing reporters after the 48th GST Council meeting, finance minister Nirmala Sitharaman said the higher rate of compensation cess of 22 per cent is applicable to a motor vehicle fulfilling all four conditions -- it is popularly known as SUV; has engine capacity exceeding 1,500cc; length exceeding 4,000 mm; has ground clearance of 170 mm and above.

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In response, SIAM in a statement said this has brought in a clarity that higher rate of compensation cess of 22 per, over and above of 28 per of GST, will be applicable only on such vehicles which meet all the four conditions.

"SIAM is thankful to ministry of finance, government of India and the GST Council for issuing a clarification on the definition of SUVs," it added.

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This is on the lines of SIAM's recommendations and based on the earlier discussions SIAM had with the ministry of finance, it added.